Friday, December 6th, 2019
Ever wonder about the history of workers’ compensation or what all it entails?
Below is an excellent overview of some of the basics on workers’ compensation. Even if you are very experienced with this line of insurance, the below is still helpful information. Since the folks at Risk and Insurance did an amazing job on their summary with the help of many contributions from Amtrust, the below are snippets taken from https://riskandinsurance.com/.
Workers’ compensation insurance is protection for people who get hurt or become ill during their employment. It can be the result of an accident — like hurting their back in a fall or being burned by a hazardous chemical. It can also be the result of repeated exposure to something harmful during work, like losing hearing due to persistent loud noises or rotator cuff damage from performing the same arm motion over and over.
- Workers’ compensation insurance offers five basic benefits:
- Medical care for the injured worker.
- Temporary disability benefits to make up for lost wages while the injured employee is recovering.
- Permanent disability benefits if an employee can’t return to work.
- Supplemental job displacement benefits, which pay for skill enhancement or retraining if the injured worker can’t return to the job they had before the injury.
- Death benefits paid to a spouse, children or dependents if the worker dies as a result of job-related injury or illness.
What is the history of workers’ compensation?
The concept of providing monetary compensation for injured workers dates back to approximately 2050 BC in the city-state of Ur because of a mandate by King Ur-Nammu. Hammurabi’s Code, written in roughly 1750 B.C., provided a similar set of rewards for injuries.
In more modern days, Spanish pirates in the 1700s followed the “pirate code,” which offered compensation for injuries. Losing an eye yielded a certain amount of treasure. Losing an arm yielded more. They even offered injured workers easier jobs — creating the world’s first light duty, return-to-work programs.
German Chancellor Otto Von Bismarck passed the “Workers’ Accident Insurance” bill in 1884, essentially creating the first modern workers’ compensation program in Europe. The idea soon spread to the United States and gained traction after the publication of Upton Sinclair’s 1906 novel The Jungle, which detailed the dreadful working conditions inside Chicago slaughterhouses. In 1908, at the urging of President Theodore Roosevelt, Congress passed the Federal Employer’s Liability act.
Roosevelt argued to Congress that “under the present law an injured workman … has no remedy, and the entire burden of the accident falls on the helpless man, his wife, and his young children. This is an outrage. It is a matter of humiliation to the Nation that there should not be on our statute books provision to meet and partially to atone for cruel misfortune when it comes upon a man through no fault of his own ….”
By 1911, Wisconsin passed the nation’s first state workers’ compensation law. Nine other states
passed regulations during the same year. Before the decade concluded, 36 others would follow suit.
Do I have to buy workers’ compensation insurance?
Workers’ comp is required in every state except Texas. The workers’ compensation insurance requirement is dependent on the number of people a company employs. More than half of all states require employers to carry coverage if they have one or more employees. Yes, even a small business needs workers’ comp.
States like Georgia, Arkansas, and Michigan require workers’ compensation insurance for three or more employees; while states like Missouri, Tennessee, and Alabama require it for five or more. In Texas, workers’ compensation insurance is not required unless a company is contracting with a government entity.
The penalties if you do not obtain workers’ comp insurance can be stiff. It can lead to allegations of criminal noncompliance in states like California, Massachusetts, Michigan, Pennsylvania and Illinois. It can also lead to fines that vary depending on the number of employees, the reason for noncompliance, and the amount of time a business was noncompliant. In Pennsylvania, for example, employers can face civil or criminal charges. Individuals responsible for lapses in coverage could face up to seven years in prison, and $15,000 in fines.
Who does workers’ compensation insurance cover?
A workers comp policy covers employees who’ve become injured or ill on the job, or while doing employment-related activities. Which employees are eligible depends on each state. Many states require workers’ compensation insurance for W2 employees. Some require it for independent contractors like freelancers, volunteers, and consultants.
“Correctly classifying your workers can help reduce aggravation at the time of a premium audit. Your agent can help and if they have questions our underwriters are always available to help resolve issues. The ‘guiding light’ for classifications is the Scopes manual, which outlines the proper classifications for all employees,” said Matt Zender, Senior Vice President, Workers’ Comp Product Manager, AmTrust Financial Services.
It does not cover employees who have been injured outside the scope of work, self-inflicted injuries, injuries or illnesses from drugs or alcohol intoxication, injuries caused by fights or horseplay, or injuries sustained after an individual’s employment has been terminated.
How do state laws differ for workers’ compensation?
Some states, like California, are “no-fault,” meaning injured employees don’t need to prove that their injury was the fault of someone else to receive benefits. In “fault” states, it’s necessary to demonstrate who was to blame for an accident, making the claim resolution process longer and more arduous.
The National Federation of Independent Businesses offers a comprehensive state-by-state breakdown of the laws and requirements for workers’ compensation.
How does workers’ compensation insurance compare for different industries?
Every industry faces unique exposures and structures workers’ compensation insurance differently. Let’s examine construction, food services, healthcare, manufacturing and retail.
Construction: Injuries from handling heavy equipment, illnesses from exposure to hazardous chemicals, falls at job sites — the construction industry is filled with risks. Companies may be held liable even for injury to a subcontractor. Workers’ compensation insurance covers wages and medical expenses for injured workers — as well as court costs. Risk managers in the construction industry should be sure that workers are wearing personal protective equipment (like hard hats), are trained in the latest safety protocols, and identify hazardous materials long before a job begins.
Food Services: Falls on wet floors, back injuries from repetitive motions, cuts from sharp knives, and burns from hot food are all common injuries in food service. It’s a fast-paced world where employees hurry to get food prepped, cooked and onto patron’s plates — and that time crunch can lead to accidents and injuries. If people travel for work (like a catering company) automotive accidents could be covered under workers’ compensation. To mitigate risk, ensure that staff wear proper attire, go through safety training, and wear proper safety equipment.
Healthcare: Repetitive movements, strains from lifting heavy patients, exposures to sicknesses, dealing with physically aggressive patients — they can all lead to injuries or illnesses for healthcare workers. Like other industries, workers’ compensation insurance for healthcare workers will cover lost wages and medical expenses for workers affected. Risk management tips include safety training, safe handling of hazardous chemicals, and proper lifting techniques and equipment.
Manufacturing: There are no shortage of risks in manufacturing. Whether equipment malfunctions, employees suffer a sprain or strain from heavy lifting, or repetitive motion wears down muscles and joints — manufacturing can be particularly tough on the body. Good risk management includes ongoing safety training, state-of-the-art equipment, and proper safety gear.
Retail: Employees in the retail industry can hurt themselves while stocking shelves, slip on a wet floor or get carpal tunnel syndrome from working a cash register day after day. While the injuries may not sound as severe as other industries, they still lead to more than 120,000 days away from work each year (see below.) Risk managers should ensure that workers wear closed-toed shoes, properly stretch before lifting heavy merchandise, and invest in ergonomic office supplies.
Industries with the most severe workers’ comp incidents 2017:
What are the most common types of employee injuries?
The five most common types of workplace injuries are:
Overexertion. Lifting heavy objects and repetitive motions can lead to strains and sprains. Keeping heavy objects close to the body, bending at the hips, keeping good posture, and maintaining overall good condition can help to prevent these injuries.
Slips, Trips and Falls. Certain floor surface types, changes in level or friction and foreign objects in the way can precipitate a slip and fall. Keeping pathways clear and putting up slippery surface warning signs where appropriate can prevent accidents.
Transportation Incidents. For employees on the road, wearing seatbelts, evaluating weather conditions, implementing routine maintenance, and monitoring work hours will keep themselves and others on the road safe.
Burns. Some industries have considerable exposure to burn risks including restaurants, construction, auto mechanics and certain types of manufacturing. Wearing and using protective equipment and maintaining tools can reduce the hazards.
Lacerations. Employees can be cut or punctured by tools, machines, instruments, as well as environmental objects like plants or animals. Maintaining equipment and enforcing safety procedures can reduce the risk.
How can I avoid workers’ compensation claims or losses?
Every company should have a comprehensive risk management program — especially if they work in high-injury sectors. There are a number of initiatives you can take:
Conduct post-offer, pre-employment physicals: Make sure that people can perform the job tasks before actually putting them to work. That’s what Monmouth County, New Jersey does for its most physically challenging jobs. Potential new hires must perform a series of tests to make sure they’re capable of fulfilling the job tasks before they actually get hired. The post-offer, pre-employment program helped lower claims by 44 percent and losses by 76 percent from 2009 to 2017.
Consult the experts. There is plenty of literature about the best ways to mitigate injury risks. AmTrust Financial has a particularly robust set of loss control resources aimed at sectors like workplace safety, commercial property, and transportation.
Train constantly. Don’t just train new employees. Make sure everybody is going through ongoing training sessions so they’re up-to-date and well-versed in the latest safety protocols. Train them on site-specific hazards, emergency response situations, safe handling of hazardous chemicals and materials, and identifying potential new hazards.
Assess your workplace for safety risks. Examine your workplace to identify potential hazards and how they might affect employee safety. After the assessment, follow up to make sure the hazard has either been eliminated or that sufficient training is provided to help workers avoid injury. “There are countless resources available to assist employers in the development of their safety policies and procedures: the loss control staff and loss control website of their workers’ comp carrier, Federal OSHA, their state’s occupational safety and health division or program, industry trade groups, and their insurance agent can also recommend solutions,” Wilkins said. “In all cases, a safety manual/program needs to be specific to each individual operation. Companies can use sample resources found on AmTrust’s website to assist in creating a safety manual/program.”
Identify injury trends. Do the same accidents keep happening? Do new employees seem to be getting hurt most often? What are the costliest injuries at your workplace? Identifying trends can help you mitigate problems on a broader scale.
Develop a safety-and-wellness program. Encourage stretching and movement before heavy lifting. Offer training on the most ergonomic ways to perform daily job tasks. Run a competition to see who can take the most daily steps. Initiatives like these can lead to a healthier workplace and less potential injuries.
Invest in the right tools. Proper protective gear is crucial. Everything from eye protection to gloves to gas masks to full body suits can help prevent injuries and illnesses. Don’t just assume employees know how to use the tools, train them on how to properly put them on, remove them, and maintain them.
What injuries are covered?
Workers’ compensation insurance covers only injuries that occur at work or in the process of employment. This is known as “AOE/COE” — arising out of employment and occurring during the course of employment. This includes everything from a chef cutting herself with a knife to a construction worker breaking his leg after falling off a ladder. The injuries or illnesses can also be the result of cumulative trauma — like back injuries from lifting heavy materials or joint pain from repetitive motion.
Pre-existing conditions are a bit of a grey area. Sometimes a new injury can exacerbate an existing injury — and that would trigger coverage, although benefits may be reduced. If you hurt your knee on the job, but medical examinations find that you have arthritis in that knee, you’ll still get benefits because the new injury exacerbated the old one — but the benefits may be limited.
How can I fight workers’ compensation fraud?
Workers’ compensation fraud is unfortunately common. Many workers feign injuries to receive benefits while staying out of work. In fact, the National Insurance Crime Bureau reports that workers’ compensation fraud costs insurers as much as $7.2 billion annually.
Here are some things you can do to fight fraud:
Look for warning signs. Was the injury reported on Monday morning? Did it happen immediately following a job termination? Were there zero witnesses? Does the claimant have a history of suspicious claims? Was the injury reported late? Are they refusing X-rays or other diagnostic tests? These can all be warning signs of fraud.
Check their Facebook page. Is an injured worker out on leave but posting photos of themselves lifting heavy objects, running marathons, or skydiving? If so, you’ve likely caught them committing fraud.
Implement motion-capture technology. Similar to the technology used in filmmaking or video game creation, motion-capture technology can watch a person move and help determine if they’re actually injured or feigning an injury to gain workers’ compensation benefits.
Issue a zero-tolerance policy around workers’ compensation fraud. Train your employees about the dangers of workers’ compensation fraud and explain that it could lead to serious repercussions.
Encourage people to share suspicions. Provide an anonymous tip line or email address. Give rewards for whistleblowers. Creating a culture where people can speak out will help detect fraudulent behavior.
Hire private investigators. When it’s serious enough, hiring private investigators can prove fruitful. They just might come back with video of the “injured” worker running, jumping, golfing, or playing sports.
What are some common workers’ compensation terms?
There is plenty of jargon associated with workers’ compensation insurance. Here’s a basic glossary of terms:
Accepted claim/admitted claim: A workers’ compensation claim in which the injury or illness is covered by workers’ compensation insurance.
Alternative work/light duty: A new job offered to an injured employee that gets them back to work but not in the same role they performed while getting injured. The role must last at
least 12 months and pay at least 85 percent of the previous pay.
Americans with Disabilities Act (ADA): A federal law prohibiting discrimination against people with disabilities in several areas, including employment. It requires reasonable accommodations for employees with disabilities or who become disabled due to a work injury or illness.
Claims administrator/adjuster: The individual at an insurance company who handles an injured workers claim.
Commutation: A lump sum payment of part or all of an injured worker’s permanent disability award.
Ergonomics: The study of how a workplace and the equipment used there can best be designed for comfort, efficiency, safety, and productivity. Proper ergonomics can prevent injuries.
Fault state/no-fault state: In a “fault state,” workers’ compensation benefits are dependent on who is to blame for the accident. In “no-fault” states, benefits are given to any worker injured on the job.
Fraud: Knowingly faking or feigning an injury or illness to gain workers’ compensation benefits.
Impairment rating: The percentage estimate of how much an injury has affected the use of an injured worker’s body. It can include physical impairments or mental impairments — and be permanent or temporary, severe or mild.
Independent medical examination: A medical exam performed by a physician not chosen by the company or the injured worker. This step is typically taken after a dispute arises over the extent of an injury.
Permanent disability: Payments to an injured employee when an on-the-job injury permanently limits the kinds of work they can do and/or their ability to earn a living.
Temporary partial disability: Payments to an injured employee who can still work, but not at the same rate or level that they did before the injury or illness. These payments are available for a limited time, ending when a worker makes a full recovery.
Temporary total disability: Payments to an injured employee who is unable to work at all for a temporary period of time. The benefits stop when the employee is able to resume working.
Thank you again for being an Omega Insurance Solutions Partner.
Friday, November 1st, 2019
Part one: Omega is your partner
Part two: Common misunderstanding in Workers Comp
Part one: Omega is your partner
More and more agents are finding out that having a key partner like Omega Insurance Solutions can help them gain more commercial customers by helping our their clients with their workers comp policy. In my 20 years of writing workers comp through independent insurance agents, I have discovered not all agents are the same as expected, but they all do share some commonalities as well like:
- Agents want the bottom line even if it is a quick decline, I can usually do that.
- Agents needs someone who knows more about workers comp than they do. I hope that is the case with Omega, but I learn everyday; We certainly specialize in WC.
- Agents need WC many times as the one coverage needed for them to gain control over the client’s other commercial coverages.
- Agents do not often understand the nuances of WC so they need a partner like Omega who can help them navigate WC.
- Agents want fast service. Everyone promises this. Omega is pretty good at delivering quick turnaround.
If you are like most agents, you should find Omega to be a great resource for helping you accomplish your goals. Omega has an amazing reputation with our 17 carriers due to our ability to write qualifying business that we pre-underwrote to their appetite guidelines. We maintain an average 20% loss ratio with our markets which speaks well to our staff who do such a terrific job of pre-underwriting the submissions you send our way.
Don’t forget our available training: Webinar Training
Part two: Common misunderstanding in Workers Comp
One of most common misunderstandings I see in workers comp with agents and CSRs is the concept of limits. Workers comp has two parts. Part 1 is Workers Compensation which covers the medical expense for an injury and if needed the indemnity (partial wages while out of work). Part 1 has no stated limits. Part 2 is Employers Liability which is separate coverage for liability for the owners of the company. Part 2 has standard or statutory limits of $100,000/$500,000/$100,000 (Each Accident/Disease-Policy Limit/ Disease-Each Employee) or they can elect to increase limits on part 2 to either $500,000/$500,000/$500,000 or $1,000,000/$1,000,000/$1,000,000.
So, when talking about limits with workers comp, remember the stated limits only applies to part 2 Employers Liability. Part 1 WC has no limits.
How Employer’s Liability Coverage Works
Employer’s Liability Insurance usually covers all types of employer’s liability claims unless the policy specifically excludes them. However, some claims are more common than others. Employer’s Liability lawsuits typically involve one or more of the following four claims:
- Third party over actions. Another party that was held liable for your employee’s injury files this kind of lawsuit against your business. So say, for example, you own a small construction business. One of your employees was injured using a piece of machinery that you had not properly maintained. The employee sues the manufacturer of the equipment, and the manufacturer turns around and sues you for contributory negligence. (Note: in these cases, the employee can still collect Workers’ Comp benefits and file a lawsuit against the third party.)
- Loss of consortium. An injured employee’s spouse files this type of lawsuit. They sue your business because their spouse is no longer able to “engage” in marital relations after their work injury.
- Dual-capacity suits. An employee can file this type of lawsuit against their employer when a product the employer manufactures is the cause of their injury. That means you would be liable as both an employer and as a manufacturer.
- Consequential bodily injury. If your employee’s family members suffer bodily injuries as a consequence of the employee’s injury, they could sue your business. For example, say your roofer’s wife suffered an aneurysm from high blood pressure / stress after he fell off a roof and became paralyzed. She could sue you for medical damages.
When these claims happen, Employer’s Liability Insurance can cover your business’s…
- Legal defense fees.
- Damages or judgments.
- Other court costs.
You don’t pay extra for Employer’s Liability coverage unless increased limits is selected.
As a reminder, we value our many loyal agents and welcome your feedback. Let us know what topics from below suggestions or beyond you would like our blog to cover:
- The Do’s and Don’t’s of WC
- What questions should I ask prospects?
- Tips for accurate and fast quotes
- What is a PEO?
- Common WC questions
- Omega WC niches
Until next time, stay in touch, let us know your thoughts or input and send me WC apps to quote for you soon.